Why hoteliers need an OTA run by hoteliers

This article was originally published on

By Viewpoints|January 19, 2016

Consider this: A hotel search engine focusing specifically on discovering the most appropriate accommodation for the customer. Built by those with first-hand experience, who have the knowledge required to deliver the most relevant results. Easy to use, engaging and, most importantly, effective, a Hotelier’s Online Travel Agent (HOTA) that sets itself apart from the OTA market leaders.

Every hotelier has considered the idea of a Hoteliers OTA ( or HOTA), and the likes of RoomKey have put it into play. However, many will agree that all attempts have fallen short in one way or another.

Why have previous attempts failed?

It’s relatively easy to see why HOTAs have flopped. If you want to be the HOTA, you need to be cheap for the hotel in regards to fees and commissions. Really cheap. Unfortunately, this means that your marketing budget will be very low and there’s no competing with the big boys (Priceline, Expedia) as they’ll always smash your marketing spend 100:1.

If you can match room prices to the main players, then great. But if you don’t offer your customers another incentive, what’s the point? What will they gain from booking with you rather than booking.com? You’ll typically argue that the HOTA offers a more informed result – after all, it’s been built by hoteliers themselves. Is this incentive enough? Potentially, but you’ll need to catch your customers first.

Now, when it comes to harnessing your customers’ interest, there are plenty of ways for you to stand out from the crowd. Particularly in a digital landscape. Unfortunately, marketing your brand comes with its own problem: your price point might potentially drive plenty of conversions, but when turnover flounders in the first phase, you’ll have little budget for marketing activity. And the early days is when it really counts.

Finally, when it comes to launching the HOTA, it doesn’t take a genius to figure out that the startup will only list a handful of properties. In contrast, the larger OTAs offer almost every hotel under the sun. It’s pretty tricky to compete with someone who tops your listings twenty thousand times over.

Great, so it’s impossible… Or is it?

For the Hoteliers Online Travel Agency to work successfully, it needs to counteract the problems raised by limited spend, uncompetitive pricing, expensive marketing and a restricted portfolio. So how can this be achieved?

1. Let’s first think about cost. OTAs generally use a 15-25% commission model, but obviously this won’t work for us. Instead, we should alter the cost structure to a transaction fee – approximately one to two dollars per booking.

2. Next, we need to reconsider pricing. The only way we can play effectively against the competition is to top them, and that’s by making sure our price is at least 10% cheaper.

3. The successful HOTA needs to connect directly to all the popular channel managers. There’ll be no need for an extranet, apart from uploading images into the profile.

4. Finally, we need to acquire traffic. Ideally for free, but at the very least, on the cheap!

The plan

Our first three points are attainable with great management, incredible salesmanship and a touch of technical know-how. But when it comes to a cheap or free traffic source, we hit a barrier. So how can we combat this, and ensure that our HOTA doesn’t flop like its predecessors?

One thing that previous HOTAs overlooked was the power of the hotels. Right here is where customers can be reached… it’s really quite obvious.

As such, we need to go directly to the hotels, leveraging them to display point of sale and marketing material, both in-house and on their websites. This presence both on and offline will ensure a wide range of customers can be reached, boosting brand awareness and driving traffic.

But why would a hotel freely market an online travel agent, you may ask? Surely that’s counterproductive? Well, with the great discount that’s also on offer, customers will in time start moving across to the hotel’s own site, or of course the Hoteliers Online Travel Agent. It’s a win-win for the hotels and customers, and they’re unlikely to begrudge the transaction fee.